Is it permissible to procure GFE for the test articles with procurement funding?
QUESTION: Is it permissible to procure GFE for the test articles with procurement funding?
First of all a point of clarification: The Federal Acquisition Regulation, or FAR, removed the official definition of Government Furnished Equipment (GFE). Despite this official change, we still need to make the distinction for our discussion today. For future reference, it is Government Furnished Property (GFP) as defined in the FAR. It is property that is provided to contractors and includes:
- Government Furnished Equipment (GFE) and Government Furnished Material (GFM)
- Property that is functionally complete for its intended purpose, durable, and non‐expendable
GFE is equipment furnished by the Government to a Contractor for the performance of a contract. Equipment should be recorded in the Government’s Accountable Property System of Record (APSR) by a Government employee prior to being furnished as Government Furnished Equipment (GFE).
Since it is part of the Acquisition and Contract Strategy, GFE can be provided in any phase of a major capability acquisition. The Financial Management Regulation (FMR) would be consulted to ensure based on timing in program, whether GFE was needed and the amount of funding required.
I have assumed the GFE is for procurement funded end items and so procurement funding should be appropriate. By this reasoning GFE can be acquired with procurement funding.
The FMR states under the RD&E appropriation, paragraph 5. Test articles and Test Support, subparagraph d. d. Articles (including end items, weapons, equipment, major test vehicles such as ballistic missile boosters or upper stages, components and materials) of types regularly procured to meet established general requirements such as operational training, operational use, or inventory which are assigned or allocated on a priority basis for use in support of approved R&D programs and which are not consumed in testing, may be financed by Procurement or O&M appropriations using the expense and investment criteria. In addition, excess items that can be made available on a priority basis from existing inventory will be reassigned for use in R&D test and evaluation programs without reimbursement. However, all items, expected to be consumed in R&D test and evaluation will be financed by RDT&E appropriations.
Other examples supporting GFE acquisition with procurement funding are “Flyaway Costs.” They are documented/cited, and refer to GFE/GFP acquisition in:
Both make the case, and support the fact that GFP are indeed acquired with procurement funding.
Additional references and Examples considered
PGI 245.103-70 states:
“(1) The requiring activity (project or program manager, or purchase request generator), as part of its responsibility for acquisition planning (FAR part 7, Acquisition Planning), is the decision point as to whether or not to furnish property to contractors. The basis for any decision to provide Government property shall be documented by the requiring activity and provided to the contracting officer.”
DoDI 5000.64 Purpose: Establishes guidance for Accountability and Management of DoD Equipment and Other Accountable Property. Establishes policy and procedures to comply with:
40 U.S.C. 524, Property Management and use of Property
31 U.S.C. 901, Establishment of agency Chief Financial Officers. Outlines requirements reflecting accountability perspectives of property management to include life cycle events and transactions Complements the DoD Financial Management Regulation (FMR) (DoDI 7000.14-R)
Flyaway costs are: Costs related to producing a usable end item of military hardware, originally associated with aircraft. Includes the cost of creating the basic unit, that is, the Work Breakdown Structure (WBS) elements of prime mission equipment (e.g., propulsion equipment, electronics, armament, etc.), system engineering, program management, system test and evaluation, warranties, engineering changes, nonrecurring start-up production costs, and other installed Government-Furnished Equipment (GFE). “Rollaway costs” and “sailaway costs” are analogous to “flyaway costs” for vehicles and ships, respectively.
Calculated by dividing total program procurement cost by the number of items to be procured. The Average Procurement Unit Cost (APUC) procurement quantity includes any EMD quantities that have been refurbished using procurement dollars. APUC is displayed in constant dollars of a base year fixed for each program. Total procurement cost includes flyaway, rollaway, sailaway cost (that is, recurring and nonrecurring costs associated with production of an item such as hardware/software, systems engineering (SE), engineering changes and warranties), plus the costs of procuring technical data (TD), training, support equipment, and initial spares.
Flyaway Cost (Rollaway, Sailaway, etc.) refers to the cost of procuring prime mission equipment (e.g., an aircraft, ship, tank, etc.). It is funded with Procurement appropriations and is part of the Investment cost category. Figure 1 shows that this term includes Prime Mission Equipment, System Engineering/Program Management, System Test and Evaluation, Warranties, and Engineering Changes. (Note: DoD 5000.04-M defines flyaway cost as being funded out of the RDT&E and Procurement appropriations, but in practice, only the Procurement-funded portion of flyaway is considered relevant by decision makers in DoD and in Congress. (This document was rescinded by DODI 5000.73, but replacement guidance on LCC categories is still pending))
The Government’s official GFE policy is stated in Federal Acquisition Regulation (FAR) section 45.102 “Policy” which states:
##Contractors are ordinarily required to furnish all property necessary to perform Government contracts.
##Contracting officers shall provide property to contractors only when it is clearly demonstrated: ##To be in the Government’s best interest; ##That the overall benefit to the acquisition significantly outweighs the increased cost of administration, including ultimate property disposal; ##That providing the property does not substantially increase the Government’s assumption of risk; and ##Government requirements cannot otherwise be met.
3.2 Sustainment Relationships Identify relationships (industry, Service staff elements, other DoD Components, Primary Inventory Control Activity (PICA), Secondary Inventory Control Activity (SICA), international partnerships, etc.) for the product support strategy. List planned provisions to ensure product support providers remain viable throughout the life-cycle. The data can be a figure, table, or diagram but must include all product support stakeholders. Considerations for System of Systems programs: Listed information should include sustainment relationships with Government Furnished Equipment (GFE) providers and other organizations with equipment that impacts the sustainment of the platform.
DoD Investment Budget Search - Defense Technical Information Center (DTIC) – (for P-DOCs)
DPC - Contracting eBusiness Government Furnished Property (GFP)
Government Furnished Property